Civil Law

Imelda Nakpil vs Intermediate Appellate Court

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225 SCRA 456 – Civil Law – Credit Transactions – Pactum Commissorium

Carlos Valdes acquired title over a Baguio summer residence named Pulong Maulap but this was actually in behalf of Jose Nakpil who arranged that while he does not have the money to pay Valdes the title remains under Valdes’ name, thereby creating a trust. The property cost P150k, P75k of which was paid by Valdes. Valdes borrowed P75k from First United Bank to pay off the remainder of the balance and another P65k for the residence’s maintenance. After Nakpil died, Valdes denied the existence of a trust relationship and he claims that the property is his. Imelda Nakpil, widow of Jose, assailed this. Valdes however agreed that Imelda and her co-heirs can stay in the property under a usufruct, free from any encumbrance, for 5 years. And in a letter sent to Imelda, should they fail to reimburse Valdes for his advances, the property is considered sold to him.

Valdes denied that there is a pactum commissorium existing because he said there is no creditor-debtor relationship between him and Imelda. And that there is no trust relationship between him and the dead Nakpil.

ISSUE: Whether or not there is a pactum commissorium existing.

HELD: Yes. The SC ruled that as per the letters sent by Valdes to Imelda, he acknowledged that he took out loans in favor of the late Nakpil so that Pulong Maulap may be acquired, and that Nakpil will reimburse him later. Therefore, a trust relationship really exists.

As per the letters as well, there exists a debtor-creditor relationship between Valdes and Imelda hence the provision which states that non reimbursement constitutes the selling of the land to Valdes is void.

Imelda can still have the property be reconveyed to her but only after she has reimbursed Valdes’ advances to the property (within 10 years).

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